Ministry to increase guarantee amount posted by agencies

A proposal to amend the Foreign Employment Act makes it mandatory for the agencies to increase the guarantee amount to Rs10 million within a year, from the current Rs3 million.

The proposal comes in the wake of growing cases of fraud and hefty sums of money involved in them. Fraud has emerged as one of the biggest problems in Nepal’s foreign employment sector. The Department of Foreign Employment registered 2,551 cases involving Rs1.34 billion in fraud in the last fiscal year. Some cases reported this year are linked to Rs20 million in fraud.

The Ministry of Labour and Employment decided to increase the amount as it was difficult for the government to match the sum disbursed to victims. Foreign Employment Promotion Board (FEPB) had consulted with stakeholders before proposing the change.

“The existing guarantee is too little to reimburse major cases or to discourage recruiting agencies from involvement in them. We believe this is a much needed change,” said an FEPB official.

The official says most of the firms are not happy with the revision as it “threatens their business”.

Currently the firms are required to have bank deposits of Rs3 million or obtain a bank guarantee worth Rs2.3 million and have Rs700,000 in deposits. The guarantee has been raised several times in view of growing fraud cases. Initially, the recruiting agencies had to deposit only Rs500,000 to obtain a licence.

Some government stakeholders say increasing the deposits alone will not work as fraud in overseas employment has different manifestations.

“It’s not just manpower agencies but a growing number of educational consultancies, marriage bureaus and travel agents that are duping workers. The law should take such practice into account too,” said Bhesh Bahadur Karki, director of the DoFE.

“It’s strange that people are ready to spend as much as Rs5 million to work as a servant in the United States, while they could own a company in Nepal with that investment,” said Karki.

Nepal Foreign Employment Association (Nafea) is divided over the proposed guarantee amount. While some big agencies favour the increase, many smaller ones claim the scheme could displace them.

Kumud Khanal, former Nafea vice-chairman, claims that the increase in bank guarantee could complicate the problem further. He accused that the government’s move comes at the behest of some recruiting agencies and INGOs.

“Legal loopholes should be addressed first. The move will simply help rich and powerful agencies to control the business,” said Khanal, adding that the proposal might be revised before it is tabled in the Cabinet.

Earlier, the Labour Ministry had initially proposed to raise the amount to Rs5 million but later it limited it to Rs3 million. Various panels formed to recommend changes in the foreign employment law had suggested increasing the guarantee amount.

Bid to better foreign employment

– Proposal to amend Act makes it mandatory for recruitment agencies to increase the guarantee amount to Rs10 million within a year, from the current Rs3 million

– Ministry decides to increase the sum as it was difficult for the

government to match the sum paid to victims in compensation

– Some big agencies favour the increase; many smaller ones claim the scheme could displace them